| Article 19 | A trust enterprise may substitute the issuance and transfer of beneficial securities with the production and book-entry transfer of other documents representing beneficiary rights.
A beneficiary who intends to exercise beneficiary rights shall do so based on the beneficial securities held or other documents representing beneficiary rights.
With respect to the negotiability of collective trust fund beneficiary rights, a beneficiary may, according to the methods stipulated in the collective trust fund agreement, transfer beneficial securities or other documents representing beneficiary rights to a third party, or request the trust enterprise to terminate the agreement. |
| Article 20 | A trust enterprise shall calculate the net asset value of the collective trust fund in accordance with applicable laws and regulations and generally accepted accounting principles.
The Trust Association shall draft standards for calculating the net asset value of a collective trust fund and submit such standards to the competent authority for approval.
A trust enterprise shall publicly announce every business day previous day's net asset value per beneficial unit of the fund. However, where the fund utilization falls under Subparagraph 6 or 13, Paragraph 2 of Article 23 herein, the net asset value calculation period and required public announcement deadline may be stipulated in the collective trust fund agreement, provided that it may not be longer than 6 months. |
| Article 21 | The beneficial securities of a collective trust fund issued by a trust enterprise shall be certified. Certification matters shall be governed by the mutatis mutandis application of the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
The beneficial securities referred to in the preceding paragraph shall be given serial numbers and record the following information:
1. Name, number of beneficial units, date of issuance, and duration of the collective trust fund, and whether or not additional issues are permitted.
2. Name and address of the trust enterprise.
3. Name of the beneficiary and number of beneficial units held.
4. Price, fees, and tax obligation per unit issued.
5. Methods by which trust proceeds will be calculated and paid upon termination of the trust agreement by the beneficiary.
6. Method for the transfer of beneficiary rights.
7. Method for the calculation and public announcement of the net asset value per beneficial unit.
8. Methods by which trustee remuneration is calculated and paid.
9. Other information as required by the competent authority. |
| Article 22 | The beneficial securities of a collective trust fund may be transferred by endorsement of the beneficiary, provided that where the trust enterprise is not notified of the name or title of the transferee, the transfer shall not be valid as against the trust enterprise. |
| Article 23 | The utilization and management of a collective trust fund shall not violate any law or regulation, and shall be carried out in accordance with the offering plan filed with and approved by the competent authority.
Except for money market collective trust funds, the scope of utilization of the trust assets of a collective trust fund shall be limited to the following:
1. Bank deposits - The credit rating of the bank must be at or above a certain level given by a credit rating agency listed in attached Table 1; in case of a foreign bank, the bank must be ranked in the world's top 500 banks by capital or assets.
2. Short-term bills - In case of foreign short-term bills, the short-term credit rating of the debtor (bill issuer, guarantor or acceptor) must be at or above a certain level given by a credit rating agency listed in attached Table 2.
3. Government bonds - In case of foreign government bonds, the sovereign credit rating of the issuing sovereign entity must be at or above a certain level given by a credit rating agency listed in attached Table 3.
4. Financial debentures - Debentures issued by an international financial organization in Taiwan with approvals of the Central Bank and the competent authority.
5. Corporate bonds (including convertible bonds, exchangeable bonds and bonds with warrant) issued by an exchanged-listed or OTC-listed company.
6. Securitized products - Excluding re-securitized products and securitized composites.
7. Where the investment instruments mentioned in the preceding three subparagraphs are issued overseas, the long-term credit rating of the issuer or guarantor and the debt rating of the debt instrument must be at or above a certain level given by a credit rating agency listed in attached Table 4.
8. RP/RS trades involving an instrument set out in any of Subparagraphs 2 ~ 6 hereof as the underlying shall also meet the following criteria:
(1) Where the instrument in Subparagraph 2 hereof is the underlying, the short-term credit rating of the counterparty must be at or above a certain level given by a credit rating agency listed in attached Table 2.
(2) Where the instrument in Subparagraph 3 ~ 6 hereof is the underlying, the long-term credit rating of the counterparty must be at or above a certain level given by a credit rating agency listed in attached Table 4.
9. Listed securities and securities traded over-the-counter as announced by the competent authority - In case of foreign securities, those securities are limited to stocks (including underwritten stocks), depositary receipts, call (put) warrants or stock warrants, participatory notes, real estate investment trusts, beneficial certificates of funds, fund shares, investment units (including inverse exchange traded funds (ETFs), commodity ETFs and leveraged ETFs) traded on a foreign centralized trading market, NASDAQ, AIM, JASDAQ, or KOSDAQ.
10. Beneficiary certificates, beneficial securities, fund shares or investment units issued or managed by a fund managing company that may offer and sell the fund through approval of or effective registration with the competent authority.
11. Gold.
12. Futures and financial derivatives.
13. Movables and real estate.
14. Other investment instruments approved by the competent authority. |
| Article 24 | The trust assets of a money market collective trust fund may only be used to invest in instruments set out in Subparagraphs 1 ~ 8, Paragraph 2 of the preceding article and other investment instruments approved by the competent authority in consultation with the Central Bank.
The total investment in bank deposits, short-term bills and repo trades made by a money market collective trust fund shall reach at least 70 percent of the fund's net asset value.
For a collective trust fund that carries a name other than money market collective trust fund, its total investment in money market shall not exceed 30 percent of its approved offering amount.
Unless a trust enterprise has been approved by the competent authority to concurrently engage in futures trust business, the total market value of futures trading contracts as defined in Article 3 of the Futures Trading Act held by a collective trust fund shall not exceed 40 percent of the fund's approved offering amount.
In managing a collective trust fund, a trust enterprise shall maintain adequate liquidity and adjust the scope and ratio of its liquid assets prescribed by the competent authority pursuant to Article 36 of the Act. |
| Article 25 | A trust enterprise shall make investment decisions regarding the utilization of a collective trust fund based on investment analysis reports, execute the transactions, make records of the investment decisions and the execution thereof, and submit regular review reports to the trust asset evaluation committee.
An investment analysis report referred to in the preceding paragraph shall state its analytical foundation, basis, and suggestions; the investment decision record shall state the type and quantity of investment target, and the timing of investment; the execution record shall state the type, quantity, price, and time of the actual investment or transaction, and explain the reason for any discrepancy with the originally made investment decisions.
The documented information required in Paragraph 1 hereof shall be recorded chronologically and kept on file for a period of not less than five years.
A trust enterprise may engage a third party possessing professional investment analysis and consulting capabilities to provide investment analysis and consulting services. |
| Article 26 | In utilizing a collective trust fund, a trust enterprise shall comply with the Act and the following provisions:
1. The fund may not be used to make a guarantee or provide security.
2. The fund may not be used to engage in securities margin trading.
3. The trust enterprise may not engage in transactions between different collective trust funds that it manages.
4. The total bank deposits of the fund may not exceed 20 percent of the fund assets with the exception of money market collective trust funds.
5. The aggregate amount of investment in the stocks, depositary receipts, corporate bonds, financial debentures and short term bills issued by any exchanged-listed or OTC-listed company may not exceed 10 percent of the fund's net asset value on the date of investment.
6. The aggregate amount of investment by any collective trust fund in the stocks, corporate bonds, financial debentures and short-term bills issued by any exchanged-listed or OTC-listed company may not exceed 10 percent of the company's paid-in capital on the date of investment.
7. The aggregate investment in the beneficial units of any fund described in Subparagraph 10, Paragraph 2 of Article 23 herein by any collective trust fund may not exceed 10 percent of the collective trust fund's net asset value on the date of investment or 10 percent of total beneficial units already issued by the invested fund; the aggregate investment in the beneficial units of any fund described in Subparagraph 10, Paragraph 2 of Article 23 herein by all collective trust funds offered by the trust enterprise may not exceed 20 percent of the total beneficial units already issued by the invested fund.
8. The aggregate amount of deposits at the same financial institution, investment in the financial debentures it issues and in the corporate bonds and short-term bills it guarantees may not exceed 20 percent of the collective trust fund's net asset value or 10 percent of the financial institution's networth on the date of investment.
9. Unless a trust enterprise has been approved by the competent authority to concurrently engage in futures trust business, the total market value of the open positions in futures trading contracts as defined in Article 3 of the Futures Trading Act held by a collective trust fund may not exceed 40 percent of the fund's net asset value on the date of the transaction.
10. The aggregate amount of investment in securitized products issued under the same securitization issuance plan by a collective trust fund may not exceed 10 percent of the fund's net asset value on the date of the investment.
11. The aggregate amount of investment in any securitized products plus investment in the stocks, corporate bonds, financial debentures, and short-term bills issued by the originator of the securitized product by a collective trust fund may not exceed 20 percent of the fund's net asset value on the date of the investment.
12. When a trust enterprise has an interested party relationship as defined in Article 7 of the Act with the originator, trustor, trustee or special-purpose company in association with a securitized product, the trust enterprise may not utilize a collective trust fund to invest in said securitized product.
13. The types of foreign futures products and exchanges at which futures trading may take place shall be limited to those publicly announced by the competent authority pursuant to Article 5 of the Futures Trading Act.
14. Investment by a collective trust fund in instruments set out in any subparagraph under Paragraph 2 of Article 23 herein shall be denominated in foreign currency provided it is an offshore investment; Subparagraph 3, Article 17 of the Regulations Governing Offshore Structured Products shall apply mutatis mutandis to instruments that an overseas financial derivative may not be linked to.
15. Where necessary, the competent authority may prescribe additional provisions for compliance in investment in movables, real estate, or other investments approved by the competent authority.
16. The trust enterprise may not engage in activities prohibited by other laws or regulations or by the competent authority.
When utilizing a collective trust fund to invest in underwritten stocks, a trust enterprise shall combine the shares of exchange-listed or OTC-listed stocks of the same type held by the fund into the calculation of total shares or aggregate dollar amount to determine whether the investment ceiling allowed is reached; when investing in depositary receipts, the trust enterprise shall combine the shares of underlying stock held by the fund into the calculation of aggregate dollar amount or total shares to determine whether the investment ceiling allowed is reached.
The provisions of Subparagraphs 4 ~ 11 of Paragraph 1 hereof and Article 27 herein do not apply to any collective trust fund in the first three months of the fund's establishment or in the month prior to the fund's expiration. |
| Article 27 | A trust enterprise that manages a money market collective trust fund shall observe the following rules in addition to the provisions of the preceding article:
1. With exception to government bonds, the fund's total investment in securities with long-term credit rating below the level comparable to twA- given by Taiwan Ratings may not exceed 10 percent of the fund's net asset value.
2. Restrictions on the expiration date and duration of investment targets:
(1) The fund may not invest in instruments with time-to-maturity longer than one year, except for repo trades.
(2) The weighted average duration of the fund portfolio may not be longer than 180 days, and shall be calculated by the duration of repurchase transaction when the investment instrument is a repurchase transaction.
3. Valuation method: Investment gain (loss) shall be recognized using cost method, that is, realized gain (loss) on the sold positions is recognized based on cost plus accrued interest plus (minus) amortization of premiums (discounts). |
| Article 28 | When a trust enterprise invests a collective trust fund in exchange-listed or OTC-listed securities, it shall engage a securities broker to carry out the trade unless it is otherwise provided by law.
When a trust enterprise invests a collective trust fund in government bonds, bills, or notes, it shall engage a bond broker or bill broker to carry out the trade.
When a trust enterprise invests a collective trust fund in futures or financial derivatives, it shall engage a futures broker, foreign exchange broker, or dealer approved by the competent authority to engage in financial derivatives business to carry out the trade.
When a trust enterprise uses a collective trust fund to invest in instruments other than those specified in the preceding three paragraphs, it shall engage a lawful broker to carry out the trade or do so in accordance with customary business practice. |
| Article 29 | The trust assets of a collective trust fund shall be registered in a collective trust fund account under the name of the trust enterprise, provided that when the collective trust fund invests in an overseas investment instrument, the name in which the trust assets are held may be governed by the agreement between the trust enterprise and the appointed foreign custodian.
A trust enterprise may mandate foreign custodians to lend out overseas securities held by a collective trust fund it manages, to which Article 15 of the Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises on the lending of foreign securities applies. |
| Article 30 | A trust enterprise shall establish a trust asset evaluation committee that shall evaluate the investment status of the collective trust fund at least once every three months, and report it to the board of directors.
A trust enterprise shall notify the beneficiaries in writing of the investment status and evaluation findings referred to in the preceding paragraph and report same to the trust supervisors. |
| Article 31 | A collective trust fund shall have independent accounting, and a trust enterprise shall not commingle it in use with its own assets or with other trust assets.
Account books relating to a collective trust fund shall be prepared in compliance with applicable laws and regulations and self-regulatory rules, and the books shall be preserved in a manner and for a period in accordance with the Business Accounting Act and applicable regulations.
A trust enterprise shall compile the following statements regarding the utilization and management of a collective trust fund:
1. Balance sheet;
2. Income and expenditure statement;
3. Statement of distributions of proceeds;
4. Statement of changes in capital account; and
5. Asset inventory.
By the 10th day of each month, a trust enterprise shall prepare the statements specified in the preceding paragraph for the preceding month, and file them with the Trust Association for the Trust Association to compile and produce statistical data.
Within 2 months after the end of the fiscal half-year, and again within 4 months after the end of the fiscal year, a trust enterprise shall file a collective trust fund business report, the statements specified in paragraph 3 hereof, and a final accounts report for the preceding fiscal year audited and certified by a certified public accountant, with the competent authority for recordation and send them to the beneficiaries, and publish its balance sheet in a manner prescribed in Article 39 of the Act.
The business report, statements, and final accounts report referred to in the preceding paragraph shall be submitted to and acknowledged by the trust supervisors before being submitted to the competent authority for recordation. |
| Article 32 | Where the utilization of a collective trust fund involves short-term bills or government bonds, a trust enterprise shall, prior to the 10th day of each month, file a report regarding the short-term bill or government bond transaction data for the preceding month in a format prescribed by the Central Bank.
For foreign currency denominated collective trust funds that are offered overseas for investment in Taiwan or offered in Taiwan for overseas investment, a trust enterprise shall report relevant data in a format and in a manner prescribed by the Central Bank. |
| Article 36 | In case a beneficiary terminates the trust agreement in writing or by other means as agreed, the trust enterprise shall make payment within the payment period stipulated in the trust agreement starting from the next day following the receipt of the termination instruction.
Where a beneficiary requests a partial termination of the agreement, the trust enterprise shall, in addition to making payment on a pro-rata basis by the time period specified in the preceding paragraph, reissue the beneficial securities or change the registration of other documents representing beneficiary rights in the manner stipulated in the agreement. |
| Article 37 | The amount to be paid to a beneficiary that terminates a collective trust fund agreement shall be calculated based on the net value of the fund on the next business day following the date on which the request to terminate the agreement made in writing or by other means as agreed is received by the trust enterprise. However, where the amount to be paid would cause the liquid assets of the fund to drop below the minimum ratio set out in Paragraph 5 of Article 24 herein or is specifically stipulated in the trust agreement, the amount to be paid shall be calculated as stipulated in the collective trust fund agreement. |
| Article 38 | A trust enterprise shall handle a beneficiary's request to terminate the agreement in accordance with the collective trust fund agreement, and may not refuse or delay payment unless otherwise stipulated in the agreement.
Other stipulations of the agreement as referred to in the preceding paragraph may include the following:
1. Where financial, securities, or foreign exchange markets suspend trading for reasons other than regular holidays.
2. Where normal communications are interrupted.
3. Where remittance transactions are restricted.
4. Where other special circumstances submitted to and approved by the competent authority prevent the request to terminate the agreement from being received or the payment from being made. |
Section 6 Termination of Collective Trust Fund and Modification of Collective Trust Fund Agreement
| Article 39 | When it is necessary to modify a collective trust fund agreement for reasons other than regulatory change, a trust enterprise shall obtain the consent of a majority of the trust supervisors or the adoption of a resolution at a beneficiaries' meeting, and submit the minutes of the trust supervisors meeting or beneficiaries' meeting, a comparison table of the agreement clauses before and after the change, and the reasons for change in a letter to the Trust Association, which shall forward them in a report to the competent authority for approval.
After the circumstance described in the preceding paragraph has been approved by the competent authority, the trust enterprise shall immediately make public announcement in a manner prescribed in Article 39 of the Act for a certain time period for the beneficiaries to decide whether to continue to participate in or withdraw from the collective trust fund. |
| Article 40 | The reasons for terminating a collective trust fund shall be as stipulated in the agreement, except as otherwise specified by laws or regulations. However the competent authority may order the termination of a collective trust fund if it deems the termination of the fund is advisable in the public interest or the interests of the beneficiaries.
Notice of the termination of a collective trust fund for reasons other than expiration shall be sent to the Trust Association, which shall forward it in a report to the competent authority for approval. After approval, the trust enterprise shall make public announcement in a manner prescribed in Article 39 of the Act within 2 business days from the date of service of the approval letter.
Where a collective trust fund is terminated due to expiration as mentioned in the preceding paragraph, the trust enterprise shall report it to the competent authority for recordation within 2 business days after the expiration date. |
| Article 41 | When a collective trust fund is terminated, the trust enterprise shall complete liquidation of the collective trust fund within 3 months from the approval by or recordation with the competent authority. The trust assets after liquidation shall be distributed to respective beneficiaries based on the proportion of beneficiary rights.
A trust enterprise shall report the liquidation and distribution methods in the preceding paragraph to the competent authority and publicly announce it, and notify the beneficiaries; within 2 months after the date upon which the liquidation procedures are concluded, the trust enterprise shall notify the competent authority by letter of the results thereof for recordation, and notify the beneficiaries.
With regard to the circumstances in the preceding two paragraphs, the trust enterprise shall first obtain the approval of the trust supervisors before reporting to the competent authority by letter for approval or recordation. |